The ECB's monthly meeting resulted in an unchanged interest rate, but much speculation about the future of the region's economies. Bank President Mario Draghi told reporters that the region's economic outlook would face “downside risks” in 2013. With investors already on edge about the demand for crude in 2013, his statements weighed heavily on Brent prices.
Adding to the belief that crude demand will waver in 2013 is the looming U.S. fiscal cliff, set to kick in on January 1. U.S. lawmakers have yet to agree on a reasonable solution to the nation's deficit, causing investors to wonder if the fiscal cliff is a repeat of last year's debt ceiling crisis.
If Democrats and Republicans can not come to an agreement before the New Year, economists predict that the largest oil consumer will be sent into recession.
Brent prices have been underpinned by escalating tension in several parts of the Middle East, though. According to CNBC, protests in Egypt have killed at least seven people in Cairo as opponents to President Mohamed Mursi continue an ongoing effort to denounce his November 22nd decree that none of his decisions can be legally challenged. This week, several of Mursi's advisers resigned.
An ongoing civil war in Syria and Israeli plans to build settlements on West Bank have also added to Brent's price support. As the region grows more unstable, many worry an oil supply interruption is a real possibility.
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